Luxury retailers are wise to turn up their noses to Black Friday’s dark temptations.
While speculations that Black Friday is dead are overblown, the shopping holiday has indeed lost some of its appeal, mostly on the ground level. According to retail analyst company ShopperTrak, customers spent $10.4 billion on in-store purchases on Black Friday in 2015, a $1 billion drop from 2014.
The reason for that drop isn’t rocket science. Customers can find similar or identical discounts online and in store, so why brave a mobbed mall? Last year, online sales on Black Friday increased by 14 percent from 2014, to $2.7 billion.
Still, as luxury retailers look to the holiday season as a time to pick up sales and in-store traffic, the noise around Black Friday can tempt high-end brands to jump in.
“High-end retailers are looking for some kind of pick up on Black Friday, even when they’re not looking to discount,” said Natalie Kotlyar, consumer business leader at accounting and consulting firm BDO. “Discounts can deteriorate the brand, so luxury retailers are joining the action in other ways.”
That includes in-store activations and experiences, like tech installations, champagne tastings, exclusive product releases and seasonal arrivals. The goal is to get customers in while they’re already out shopping and then convince them to buy at full price. Online luxury marketplace Orchard Mile will be hosting its first pop-up store in New York City—it opens on Black Friday. The shop will have iPads and fittings rooms, and everyone who enters will win the chance to receive every item in the pop-up for free. However, there won’t be any promotions.
That doesn’t mean luxury retailers avoid discounting entirely. Basically, they’re just more discreet about it. Retail technology company Edited found in 2015 that 33 percent more luxury items are discounted for the first time on Black Friday, as opposed to mass products, which start discounting at various lead-in times.
“Luxury items aren’t immune from the holiday sales, the cadence of the discounts just differ greatly,” said Edited senior analyst Katie Smith. “This is a smart strategy for retailers of luxury goods: Having trailing low-level discounts seeping into the entire holiday buildup can damage brand perception. Fast price drops will be detected by the price-smart shoppers, without causing long-term damage.”
In department stores, luxury goods can benefit from the stores’ heavy discounting on Black Friday—the resulting foot traffic from major retailers discounting other brands can drive full-price luxury purchases, said Kotlyar. With accessible luxury brands like Michael Kors and Coach pulling inventory from department stores that routinely slash their products’ prices, retailers are planning to protect these brands from their discounts. Luxury brands are also taking a strategic step to ensure fewer products end up on clearance: Burberry, Ralph Lauren, Calvin Klein and more are reducing the number of items they put on sale in retail and wholesale stores in an effort to trim the fat.
“If the wholesale retailers don’t align themselves to what the master brand is doing, then yes, they can hurt luxury labels,” said Jodie Huang, manager of insights at Mindshare North America. “Extreme discounting from wholesale partners can hurt the aspirational image of luxury labels, and companies like Coach have begun to pull some of their products away from certain retailers for this reason.”
Where, in the U.S., Black Friday has become synonymous with slashed prices and in-store customer brawls, other shopping holidays offer more promise to luxury brands. This year, Michael Kors, Coach, Neiman Marcus and Calvin Klein participated in China’s Singles’ Day festivities, a mobile-driven promotional day that offers brands a leg up in the region. Singles’ Day has a stronger reputation, and it also dwarfs Black Friday in size. This year, $17.8 billion in sales was done on the day, November 11.
“With the size of the event, a lot of brands are hoping to egg this on and see that uplift come through because of the scale of the market they’re facing,” said John Neilson, director of marketing at Clavis Insight, in regard to Singles’ Day. “You can only offer significant discounts when you’re banking on that volume. Upper echelon brands like Gucci will be watching closely to see what happens.”
In contrast, in America, brands are beginning to push back against the spectacle that is Black Friday in order to win over more mindful consumers. Handbag brand Oliver Cabell will be closing up its online shop on Thanksgiving weekend and sending out a note to customers stating that it’s celebrating “intentional buying.”
Oliver Cabell joins Everlane, which traditionally shuts down on Black Friday and instead makes donations to its partner factories on the holiday, and REI, which closes all storefronts and its online stores as part of its #OptOutside movement.
“What’s a luxury to customers is not feeling pressure to go out and shop on this busy day,” said Kotlyar. “That’s what retailers should be paying attention to.”